New guidelines to accept donations of non-monetary assets accounting accounting donation by fdjerue7eeu


									New guidelines to accept donations of non-monetary assets accounting accounting

  monetary donation of assets accounting
  2006 Ministry of Finance issued new accounting standards system was January 1,
2007 listed companies implement, but the criteria for this release than the previous
simple guide to many in the process of implementing new guidelines to more reliance
on professional accountants to judge. On the acceptance of donations of non-cash
accounting treatment of assets in terms of inventory norms guide, or in fixed assets,
intangible assets, long-term equity investment criteria and guidance are essential not
to accept non-cash assets involved in the donation. So, what is on the donations of
non-cash assets should be handled? Accounting [2003] on the 29th file is still
applicable to listed companies? New guidelines on the interpretation of the following
  1, the same tax treatment
  enterprises are still under the State Administration of Taxation [2003] No. 45
document, calculate and pay income tax payable, as at present there is no new
relevant tax regulations issued: April 24, 2003, the State Administration of Taxation
issued Guoshuifa [2003] 45 document "on the implementation of" Enterprise
Accounting System> need to clear the Income Tax Issues, "the main spirit of
the provisions, from 2003 on January 1, the companies accepting donations of
non-monetary assets, subject to acceptance of donations recorded value of assets
donated to confirm income and credited to the current taxable income, corporate
income tax is calculated and paid according to law; companies operating in the use of
donation of non-monetary assets, according to the tax law provision for depreciation,
amortization, or carry-over inventory cost of sales, investment transfer costs, and pay
the corporate income tax in the forefront of support. The two provisions can be
summed up:
  First, when tax time to accept the donation, rather than non-monetary assets for sale
or disposal; Second, the recipient of non-monetary assets, depreciation, amortization
so you can properly enter the production costs or expenses, constitute business
  2, according to new accounting standards related to
  related reason why the accounting treatment under the new criteria is that the
Ministry of Finance [2006] 3 document, "Ministry of Finance on the issuance of"
Enterprise Accounting Standards No. 1 - Inventory> 38 specific criteria such
notice, "provides that" the implementation of the 38 specific standards of business,
not the implementation of existing guidelines, "Accounting", and "Financial
Accounting System". " Can be seen, according to "enterprise accounting system" and
related guidelines issued by Finance [2003] No. 29 document is no longer enforced,
because the skin, hair adhere to. So the new guidelines is how to provide it?
  new class of criteria though the underlying assets are not involved in the problem,
but the new accounting standards in the Guide to the appendix "of accounts and key
accounts handling", the provisions of "business income" subject the accounting of an
enterprise operating income , including non-current assets disposed of profits, the
profits of non-monetary exchange of assets, debt restructuring gains, government
subsidies, set a profit and donate the profits and so on. Visible, accepted the donation
of assets no longer as a "capital reserve", and as corporate profit or loss. Accordingly,
I draw on reasonable prior accounting treatment related to composition and
"Corporate Accounting Standards No. 16 - Government subsidies" requirement,
combined with the relevant provisions of tax laws, accept the donation of assets on
the accounting treatment recommendations are as follows:
 (1 ) recognized enterprises to obtain the donation of non-monetary assets should be
recognized directly in profit or loss for the current (operating income); if companies
donated large amount of non-monetary assets, upon approval, not more than 5 years
the average period of phased included in taxable income each year, it should be
recognized as deferred income, included in the 5 years after graded periods of profit
and loss (operating income). Related assets were sold in less than 5 years, transfer,
retirement or damage occurred, and should not allocate one-time transfer of deferred
revenue balance of current asset disposal gains and losses.
 (b) Measurement of donations of non-monetary assets should be measured at fair
value. If the assets with the relevant agreements, invoices, customs declarations and
other evidence indicated little difference between value and fair value, and should be
indicated in the certificate value of fair value; if not specified value or stated value
and fair value quite different, but an active market should be based on strong evidence
of the same or similar price as the fair market value of assets; if the value is not
specified and there is no active market, fair value can not reliably be achieved, should
the expected future asset the present value of cash flow measurement.
 (c) accounting companies made donations of non-monetary assets, the relevant
criteria should be determined as recorded value, debit, "fixed assets", "intangible
assets", "long-term equity investment" and credit " operating income "subject,
according to company assets due to accept the donation amount paid or payable,
credited to" bank "," tax payable ", etc; if companies donated large amounts of
non-monetary assets, upon approval, In a period of not more than 5 years installments
included in the annual average amount of taxable income, shall be debited to the
underlying assets and credit the "deferred income" subject; annual allocation, debit,
"deferred income" subject credited to "operating income" subject.
 (d) the accounting treatment of income tax assets due to receive donations as income
(operating income) treatment, while operating income is an integral part of total
profits, just the normal income tax accounting treatment can be.
 (5) No retroactive adjustment will be accepting donations from the assets as "capital
surplus", the words "operating income", the changes in accounting policies, but, in
accordance with "Accounting Standards for Enterprises No. 38 - the first views the
implementation of corporate accounting standards "requirement, in the preparation of
the opening (the first exercise date) when the balance sheet, no retrospective
adjustment. But should be "capital surplus - donations of non-cash assets ready to"
balance transfer "operating income" credit, since the balance is the amount of tax, so
this year when calculating the amount of taxable income should be deducted; the
same time, the "value of the assets to be transferred - donation value non-monetary
assets" subject balance to "deferred income" subject credit.
  3, the new practice guidelines for assessment
  (a) reflects the importance of the principle of simplifying the importance of
accounting procedures in accordance with the requirements of the principle, the major
economic activities shall be accounted for, separate to reflect, and strive to accurate,
as highlighted; for important economic and business information without affecting the
authenticity of the accounting situation, you can simplify the calculation, reflecting
the merger. The importance of the principle of the use of the substance in order to
grasp the problem, focus on key points, both efficiency and effectiveness in order to
realize lower costs, greater efficiency purposes. Donations of non-cash assets are
non-routine operations, for an enterprise, the probability of occurrence and may rarely,
some companies may have never experienced similar business, even if occasional,
generally not a great amount of , the users of accounting information had little
influence, unless the amount of large donations. Therefore, in accordance with the
provision of accounting information, cost-effective, should be simplified accounting.
However, the previous accounting system to accept donations of non-monetary assets
accounting treatment is too complicated, cumbersome, not only increase the cost
accounting of itself, can not bring the desired effects; while distracted, impact quality
of accounting information. Therefore, the new guidelines for accepting donations on
the accounting treatment of non-monetary assets simplified, fully reflects the
importance of the requirements of the principle.
  (b) embodies the principle of substance over form, donate the profits to restore the
truth of the nature of our new "Accounting Standards for Enterprises - Basic
Standards" clearly states: "Enterprises should be in accordance with the transactions
or accounting matters of economic substance recognition, measurement and reporting,
not only the legal form of transactions or events based on. " The new guidelines will
be accepting donations of non-monetary assets as profits (operating income) treatment,
reduction of the profits donated to accept the truth of nature is a manifestation of this
  corporate donations is essentially a profit, rather than capital investment. According
to FASB's SFACNo.6 definition of profits is "a major business enterprises due to
outside Huodong or incidental to transactions in a particular period in addition to
income and property owners arising from investment of the major, the Suoyou other
transactions Hu Shi Xiang Quan Yi led the owners (net assets) to increase "profits are
four main sources: accidental or non-operating activities
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